New York - The Facts on New York's Tax Climate

Here are some basic facts on New York's tax system and how it compares to other states:

Tax Freedom Day Will Arrive on May 9th in New York

Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2006, New York taxpayers will have to work until May 9th, ranking it 2nd highest in the nation, 13 days after National Tax Freedom Day (April 26th). The Tax Freedom Days of neighboring states were; Pennsylvania, April 24th (ranked 18th), New Jersey, May 6th (ranked 3rd), Connecticut, May 12th (ranked 1st) and Vermont, April 25th (ranked 15th).

New York's State/Local Tax Burden Second Highest in Nation

During the past three decades New York has consistently had one of the nation's highest state/local tax burdens. Estimated at 12.9% of income, New York's state/local tax burden percentage stands as the 2nd highest nationwide, well above the national average of 10.6%. New Yorkers pay $5,734 per-capita in state and local taxes.

New York's 2006 Business Tax Climate Ranks 50th

New York ranks 50th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales and gross receipts taxes; unemployment insurance taxes; and taxes on wealth, including residential and commercial property. Neighboring states ranked as follows: Pennsylvania (16th), New Jersey (49th), Connecticut (39th) and Vermont (46th).

New York's Individual Income Tax System

New York's personal income tax system consists of seven brackets with top rate of 7.7%, kicking in at an income level of $500,000. Among states levying personal income taxes, this top rate ranks the state 12th highest nationally. New York's 2004 individual income tax collections were $1,282 per person, which ranked 2nd highest in the nation.

New York's Corporate Income Tax System

New York's corporate tax structure is composed of a flat rate of 7.5% on all corporate income. Among states levying corporate income taxes, New York's rate ranks 21st highest. In 2004, New York's corporate tax collections were $106 per capita and ranked 14th highest nationally.

New York Sales Tax Low at the State Level, High Locally; Excise Taxes Very High

New York levies a 4% general sales or use tax on consumers, below the national median of 5%. The state collects approximately $523 per capita in sales taxes, which ranks 38th highest nationally. On the other hand, the state permits its localities to levy much higher sales taxes than other states do. As a result, the combined state-local sales tax rate is often over 7%. New York's gasoline tax stands at 24.21 cents per gallon and ranks 14th highest nationally. Additionally, New York levies state and county sales and use taxes, which can range from 7.25%-9.75%. New York's cigarette tax stands at $1.50 per pack of twenty, ranking 10th highest nationally. The sales tax was adopted in 1951, the gasoline tax in 1923 and the cigarette tax in 1941.

New York Property Taxes among Nation's Highest

New York's local governments collected $26,825,697,000 in property taxes during fiscal year 2002, which is the latest year the Census Bureau published state-by-state property tax collections. That equals $1,400 per capita, which ranks New York 4th highest in local government property tax collections. As a percentage of income, New York's local governments collected $38 in property taxes per $1,000 of the taxpayers' personal income. By that measure, New York ranked 5th among the 50 states. New York is one of the 13 states that collect no state-level property taxes. When New York is ranked against other states' combined state-local property tax collections, it drops in the ranking from 4th per capita to 5th, and from 5th as a percentage of income to 10th.

Federal Tax Burdens and Expenditures: New York is a Donor State

New York taxpayers receive less federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2004, New York citizens received approximately $0.79 in the way of federal spending. This ranks the state 42nd highest nationally and represents a decline from 1992, when New York received $0.86 per dollar of taxes in federal spending (ranked 40th nationally). Neighboring states and the amount of federal spending received per dollar of federal taxes collected were: Pennsylvania ($1.06), New Jersey ($0.55), Connecticut ($0.66), and Vermont ($1.12).

Information from The Tax Foundation, Washington, DC